Compute, Disaggregate, and Interpret RNOA of Competitors

Halliburton and Schlumberger compete in the oil field services sector. Refer to the following 2018 financial data for the two companies to answer the requirements.

$ millions	HAL	SLB
Total revenue	$24,661	$33,481
Pretax net nonoperating expense	1,319	1,092
Net income	2,323	2,843
Average operating assets	24,027	68,502
Average operating liabilities	6,554	17,165
Marginal tax rate	22%	19%
Return on equity	18.56%	5.86%

a. Compute return on net operating assets (RNOA) for each company.

Note: 1. Select the appropriate numerator and denominator used to compute RNOA from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute RNOA.

	Company	Numerator	Denominator	RNOA
		Average assetsAverage equityAverage NOANet incomeNOPATNOPBTTotal revenueNet nonoperating profit before taxTax on operating profitTax shield	Average assetsAverage equityAverage NOANet incomeNOPATNOPBTTotal revenueNet nonoperating profit before taxTax on operating profitTax shield
	HAL
	SLB

b. Disaggregate RNOA into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for each company.

Note: 1. Select the appropriate numerator and denominator used to compute NOPM from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute NOPM.

	Company	Numerator	Denominator	NOPM
		Average assetsAverage equityAverage NOANet incomeNOPATNOPBTTotal revenueNet nonoperating profit before taxTax on operating profitTax shield	Average assetsAverage equityAverage NOANet incomeNOPATNOPBTTotal revenueNet nonoperating profit before taxTax on operating profitTax shield
	HAL
	SLB

Note: 1. Select the appropriate numerator and denominator used to compute NOAT from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute NOAT.

	Company	Numerator	Denominator	NOAT
		Average assetsAverage equityAverage NOANet incomeNOPATNOPBTTotal revenueNet nonoperating profit before taxTax on operating profitTax shield	Average assetsAverage equityAverage NOANet incomeNOPATNOPBTTotal revenueNet nonoperating profit before taxTax on operating profitTax shield
	HAL
	SLB